With EU FTA, textile firms hope to surpass Bangladesh in European exports

India's textile and apparel industry expects the India-EU trade deal to boost exports, help Tiruppur overtake Bangladesh in Europe and revive growth after tariff-led losses

India's textile and apparel industry, and knitwear hub Tiruppur, is buoyant about the likely trade deal with the European Union (EU), expected to be sealed this week.

 

The industry hopes to surpass rival Bangladesh in European exports soon, driven by the deal.

 

Moreover, the United States' stance on possible removal of additional 25 per cent tariffs will also boost India's ambition of clocking ₹9 trillion exports by 2030.

 

Tiruppur has already witnessed a loss of ₹15,000 crore in 2025 due to the higher US tariff. The knitwear capital of India has seen a major jolt as exporters had to resort to production cuts of up to 30 per cent across units due to the higher tariffs.

 

Orders to Tiruppur were getting diverted to competitors like Vietnam, Bangladesh, and Cambodia, which have a current tariff advantage. Bangladesh is one of the leading players in the European market.

 

According to a source, the EU deal, termed the mother of all deals by European Commission President Ursula von der Leyen, is likely to be cleared in one go at the European Parliament, rather than getting separate clearances from each parliament of the 27 countries.

 

The UK trade deal, signed in July, is also expected to give impetus to the apparel industry.

 

“The next decade will be for India's textiles industry. With EU and UK deals, we will surely get an upper hand over Bangladesh, which is enjoying duty-free exports to that market. For India, we have the advantage of domestic raw material supply too,” said A Sakthivel, chairman of the Apparel Export Promotion Council (AEPC).

 

Bangladesh had an advantage in the region driven by duty-free, quota-free access under the everything but arms (EBA) initiative as a Least Developed Country (LDC).

 

“European market share is around 40 per cent for us, while the US is only 30 per cent. Hence, this will be most advantageous,” Sakthivel added.

 

Major brands that source from Tiruppur include Primark, Walmart, Marks & Spencer, Hennes & Mauritz AB (H&M), Tommy Hilfiger, Amazon, TJX Companies, Kohl’s, Gap Inc., and Target.

 

The Tiruppur cluster currently accounts for apparel exports of around $1.74 billion to the EU, contributing nearly 22.9 per cent of India’s total textile and apparel exports to the EU.

 

Leyen, along with president of European Council Antonio Luís Santos da Costa, will be chief guests at the Republic Day celebrations.

 

A deal is expected to be concluded on January 27, when the two leaders will co-chair the 16th India-EU Summit hosted by Prime Minister Narendra Modi.

 

“The Tiruppur Exporters’ Association (TEA) has consistently advocated zero-duty access in the ongoing India–EU negotiations. As the India–EU Free Trade Agreement (FTA) moves closer to conclusion, we look towards the country's leadership securing comprehensive zero-duty market access for all apparel products. This is an outcome critical for sustaining employment and strengthening micro, small and medium enterprises (MSMEs)-based manufacturing clusters. It would also significantly enhance India’s footprint in the EU market,” said K M Subramanian, president, TEA.

 

US Treasury Secretary Scott Bessent said on Friday that the additional 25 per cent tariffs on India might be removed after India's purchase of Russian oil saw a significant drop.

 

“TEA firmly believes that the India–EU FTA will play a pivotal role in achieving the national target of ₹9 trillion in textile and apparel exports by 2030. It would also lay a strong foundation for India Vision 2047, positioning it as a global leader in sustainable manufacturing, inclusive growth and export excellence,” Subramanian added.

 

Tiruppur accounts for 55 per cent of India’s knitwear exports.